In the 1950s and 1960s, Howard Johnson’s rose to become the largest American restaurant chain, the first giant in the industry. The company’s familiar orange roofs and steeples covered much of the U.S. highway system. “HoJo’s” was also a leader in the development of roadside lodging. Yet by the 1980s, the party was over for this once-great company. Here is the story of this iconic American company.
Howard Deering Johnson was born in Boston in 1897 and raised in historic Quincy, Massachusetts. His father was a cigar manufacturer, retailer, and wholesaler. Howard dropped out of school to roll and sell cigars for his father and became an astute salesman. Nevertheless, the rise of cigarette smoking reduced the demand for cigars, and the business struggled. When twenty-four-year-old Johnson’s father died in 1921, the son inherited a business that was about $30,000 in debt (about a half million dollars in 2021 money).
Seeking better opportunities and a way to pay off the debt, in 1925 Howard bought a combination drug store, newsstand, and soda fountain in Quincy. The purchase was financed by $500 borrowed from his mother, possibly along with $1500 from a doctor friend. The ambitious young Johnson soon had seventy-five boys delivering newspapers and his store became successful. What most caught his attention was the popularity and profitability of ice cream.
Ice cream success led Howard Johnson to study how the ice cream was made and frozen. He developed his own formula, with about twice the butterfat content of other ice creams and a creamier consistency, not hard like most ice creams. Using syrup flavorings, over time Howard developed twenty-eight different flavors of ice cream, including banana, pistachio, butterscotch, pineapple, and coconut. People lined up to get his ice cream, which became famous around town.
With this success, in 1926 and 1927, Howard Johnson opened three summer-only ice cream stands in popular resort communities along the Massachusetts shore. The first one sold 14,000 ice cream cones on one Sunday alone. The stands also sold hot dogs, marketed as “frankforts” and were extremely profitable. In the process, Howard learned the importance of marketing through visible locations and big signs.
In 1929, at the age of thirty-two, Johnson built up the courage to open a full-service, sit-down restaurant. Gaining the confidence of the head of the Granite City Bank in Quincy, he borrowed $50,000 from the bank and opened his restaurant on the ground floor of the bank’s new headquarters in downtown Quincy, the tallest building in town.
Luck smiled on Howard when Boston banned the performance of Eugene O’Neill’s Pulitzer Prize winning play, Strange Interlude, which told the story of a promiscuous woman and her abortion. The play was allowed to be performed in a theater in downtown Quincy, drawing many of Boston’s elite out to the city. Lasting over four hours, the play included a dinner break instead of the standard short intermission. Johnson’s nearby restaurant was mobbed by the theatergoers and its reputation for quality food spread throughout the Boston area.
Eager to grow his business, Howard eyed a high visibility site on the main road to Cape Cod, at Orleans, Massachusetts. But he did not have the money to build the restaurant and sold the rights to use his recipes and brand name to the family who owned the land. They opened a Howard Johnson’s restaurant in 1935 to great success. This was Howard’s first “franchise.”
Howard Johnson did not invent the idea of franchising. Makers of machines including Singer in sewing machines and McCormick (later called International Harvester) in farm equipment had begun “exclusive territorial agencies” in the 19th century. California’s Roy Allen and Frank Wright began franchising their A&W Root Beer stands in 1924. J. W. Marriott opened an A&W in Washington, D.C., in 1927. By 1950, there were 450 A&W stands across the nation, but these were not full restaurants.
Howard Johnson applied the franchising idea to the far more complex operation of full-service restaurants, and he applied the idea aggressively. After his first 1935 franchise, he added more franchises (and some company-owned stores) as fast as he could. By the end of 1940, there were 132 Howard Johnson’s restaurants in operation. The Howard Johnson’s name, with its twenty-eight flavors of excellent ice cream, spread throughout New England. His menu expanded to include traditional American items like pot pies, fried chicken, and hamburgers. He also made fried clams popular, expending efforts to find the best clams in New England and improve their flavor.
One Howard Johnson’s made national news. Lydia Pinkham Gove was the heiress to her grandmother Lydia Pinkham’s fortune, based on the highly successful but controversial selling of patent medicines for “women’s ailments.” Gove had invested in two Howard Johnson’s locations when she agreed to invest in a huge new restaurant in Rego Park, Queens, New York City. Seating seven hundred indoors and three hundred outdoors in nice weather, the two-story restaurant opened in 1940, in time to serve the crowds attending the second year of the 1939-40 New York World’s Fair, which millions attended. Costing $600,000 to build, the “roadside cathedral” restaurant reportedly served four thousand meals on Sundays and generated a million dollars a year in revenue ($19 million in 2021 dollars).
Howard Johnson also owned and operated “company stores,” which he actually preferred, using franchising only when money was tight and held back his expansion plans. So he focused on perfecting his franchise system. The company built and operated commissaries, processing facilities that prepared his ice creams and other foods to precise recipes. Frozen foods were then delivered to the restaurants, usually in weekly shipments. Every restaurant followed a thick “bible” which detailed recipes, how to prepare the food, how to serve it, staff uniforms, signs, advertising, and every other aspect of operation. No detail was too small, no deviation or experimentation was permitted. (Howard Johnson prided himself on having no hobbies and spending every waking moment on food and his restaurants, though he also grew rich enough to collect art and have a yacht and several mansions.)
Location, Location, Location
Key to the company’s success were its real estate and architectural strategies.
The 1920s saw the rise of the automobile, and with it, cross-country road trips and Sunday drives in the country. Roadside eateries sprung up, from demure tea rooms to ratty shacks. Both often sold food of dubious quality and safety. Getting sick on the food was considered a hazard of the adventure. The early tourists slept in cabins or camped alongside the road. Despite the Great Depression of the 1930s, such tourism continued to grow as an easy and inexpensive luxury available to anyone with a car.
Howard Johnson witnessed the rise of this tourism and began to place his restaurants (and those of his franchisees) in the best possible locations. Johnson studied traffic patterns, sought key highway intersections, and looked for hilltop sites and others which were visible from at least a mile away.
The rise of highway travel also drove the rise of billboards, often handmade and unsightly. Rather than resort to them, Howard Johnson decided to make his buildings stand out. On top of an appealing, historic New England white building, he placed a bright orange roof that was visible in the daytime and at night when floodlights were shone on it. And above that, he placed a steeple reminiscent of a New England church or city hall, topped by a weathervane with his “Simple Simon and the Pieman” symbol on it (which was repeated inside and on menus).
By combining intelligent site selection with extremely visible buildings, Howard did not need billboards: the restaurants were their own billboards. Once inside, diners found the exact same comforting look of knotty pine that they found in other Howard Johnson’s.
Howard also recognized the importance of the family in the rising tourism business. Tea rooms wrestled with obnoxious children and roadside shanties scared away many women (who chose where the family would dine). Johnson figured out how to make whole families comfortable. His restaurants entertained children with big lollipops, bright colors, twenty-eight flavors of ice cream, and kid’s menus. Everything about the restaurants was “family friendly,” an innovation in roadside dining.
The combination of great locations, visible buildings, a family-oriented atmosphere, and great, consistent food made Howard Johnson’s the star of the American middle-class restaurant industry.
When America’s first toll road opened, the Pennsylvania Turnpike, it was an easy decision to award the service plaza restaurant contract to Howard Johnson’s. Opening in 1940, these restaurants further spread the company’s reputation. Unlike the other locations, the state required them to be built out of local stone. Yet they were still effective ads for the entire chain.
World War II and the Postwar Boom
During the war, sugar was in shortage, making it hard to make the company’s key ice cream. Worse yet, gasoline was rationed and fathers went to war, causing a collapse of family highway travel. Howard Johnson’s was ultimately reduced to twelve operating restaurants. One of the casualties was the big Queens location. The company survived by producing food for the troops.
Once the war was over, the American consumer economy came back to life, booming by the early 1950s. More highways, more cars, and more children fed right into the Howard Johnson’s model, and Howard took full advantage of these trends. While his system evolved and store design was modified, he never stopped paying attention to details and never stopped using big signs and orange roofs with steeples. New restaurants were opened across the Midwest and the South. People began to call the friendly, familiar stores “HoJo’s.” No American restaurant organization was nearly as famous or widespread.
The 1950s and 1960s were glorious days for the company. In 1959, Howard made his twenty-six-year-old son, Howard B. “Bud” Johnson president of the company, one of the youngest presidents of any major American company. While the young man had earned an MBA from the Harvard Business School, the father remained firmly in charge, driving the company’s growth in his obsessive way. Food quality remained high. In 1961, the company’s stock was listed on the stock exchange.
Realizing that highway travelers also need better, more consistent places to bed down, in 1953 the company opened its first combination restaurant and “motor lodge,” in Savannah, Georgia. Again using a combination of company-operated and franchised locations, the roadside inn chain contributed significantly to company profits.
By the mid-1960s, Howard Johnson’s was the largest restaurant organization in the nation and one of the largest roadside hotel/motel chains. With the opening of a restaurant in Mesa, California in 1965, the chain achieved a coast-to-coast presence.
We previously posted the 1968 revenue data for the largest foodservice and lodging chains. By that time, the Marriott family had acquired the Big Boy chain and developed their own Hot Shoppes chain, rising to the top of the restaurant industry list, and upstart Kentucky Fried Chicken (KFC) had risen to second place through their franchise systems, making HoJo’s third-largest. But Howard Johnson’s was also a major player in lodging, giving a combined system revenue (including franchised locations) of about $400 million, larger than any other company in either foodservice or lodging.
The Rapid Fall from Grace
Howard Deering Johnson retired in 1968, turning over leadership to Bud, and died at the age of seventy-five in 1972. Bud continued to grow both the restaurant and lodging chains. Revenues and profits continued to rise in the 1970s. By 1975, there were 649 company-owned restaurants, 280 franchised restaurants, 125 company-operated motor lodges, and 411 franchised motor lodges. The Howard Johnson’s brand was known in forty-three states, D.C., Puerto Rico, the Bahamas, and Canada. The company also had 95 restaurants under the Ground Round and Red Coach Grill names. In 1977. The company posted a net profit of $30 million on revenues of $420 million (counting only the franchise income from and product sales to franchisees, not their total revenue). By 1979, the company had over one thousand owned and franchised Howard Johnson’s restaurants.
Despite these record results, it appears that the company’s “feet were made of clay” by this time. Bud began to look for ways to lower food costs, which had historically been higher than at most restaurants, as much as 48% of revenues. He brought in analysts and experts who did not subscribe to his father’s obsessions. Food quality began to drop. Enforcement of standards for the company’s franchisees also slipped. Howard Johnson’s began to be seen as tired and sometimes even dirty.
This was bad timing, as the era also saw the coming of the big fast food chains, led by McDonald’s under Ray Kroc, a man as obsessed with standardization and procedures as Bud’s dad. And just as ambitious. The methods of McDonald’s, Burger King, and KFC were even more streamlined than those of HoJo’s, with much smaller menus and smaller real estate requirements. Prices were lower. The same era saw the rise of many new competitors in lodging, as well.
By 1979, a relatively short time from the company’s peak, Bud Johnson decided to get out of the business, selling the company to Britain’s Imperial Group, formerly the Imperial Tobacco Company, for $630 million. Howard Johnson’s under Imperial saw further mismanagement and decline. Efforts to update the restaurants and motels had little success. Just six years later, Imperial gave up and sold Howard Johnson’s to rival restaurant empire Marriott in 1985 for $314 million, half what Imperial had paid for it. By then Marriott had also entered lodging in a big way, eventually becoming the world’s largest hotel chain.
Marriott, renowned for the quality of its management, had no desire to continue the Howard Johnson’s name. They sold off the competing Howard Johnson’s lodging operation to Prime Motor Inns. The Howard Johnson’s restaurants that Marriott acquired were either closed or converted to the company’s Big Boy or Hot Shoppes brands.
Over time, the once great American icon Howard Johnson’s restaurants shriveled up. Today only one Howard Johnson’s restaurant remains in operation, in upstate New York. And perhaps it is not a shock that that location has low ratings on sites like Yelp and TripAdvisor.
The lodging part of the company has fared a bit better. After several changes of ownership, the inns are now owned by the giant lodging franchise organization Wyndham, branded as Howard Johnson by Wyndham. As of yearend 2020, there are 310 locations, including 168 in the United States, 69 in China, and 46 in Latin America. The locations are part of the “economy” segment of Wyndham, generating the lowest average room revenues per night of any brand in the big Wyndham portfolio, which includes Super 8, Days Inn, La Quinta, Ramada, Travelodge, and Baymont.
Any study of the “hospitality” industry – foodservice and lodging – indicates that restaurants have shorter lifespans than hotels and motels. If one picks up a travel guide from the 1960s and looks at the highest rated places, few of the restaurants are still tops or even in existence today, whereas most of the hotels are still hotels, under one owner or another. Fads and fashions in foodservice come and go with regularity.
Howard Johnson’s was subject to those same dynamics but appears to have accelerated its own demise after the obsessive founder was no longer in the driver’s seat. HoJo’s had a powerful position, at its peak possibly a higher market share of the chain restaurant industry than McDonald’s has today. Yet the company’s glory days lasted less than thirty years.
As sad and nostalgic as this story might be, it makes us at the American Business History Center even more impressed by those restaurant chains which have survived decade after decade, like White Castle. Other old-timers like Steak N Shake and A&W also continue on, some faring better than others in one of the most challenging and competitive industries in America.
American Business History Center